Money is important and this importance in our everyday lives can’t be overstated. From paying for services rendered to receiving payment for a service you rendered, or maybe even tips and privileges such as wages and handouts.
Money in one way or the other is designed to flow, through credits and debits. Yet either way, you choose to handle money, you will agree that money is designed to spend less and less time with you and your bank account. There’s a popular saying that money enters slowly but vanishes very quickly.
To better understand this, I am going to define money in relation to expenses. Money is a medium of exchange. It is a powerful tool that can help us to live well and have an abundance of what we desire. To, however, get what we want, we have to spend money. Money then is a simple exchange of value with currency.
Money is a major player in the way we live our lives and interact with our environment. But money is not everything, and money will not buy you happiness I know.
But there are some simple facts about money; without money, we can not put food on the table and we cannot cater to the need of others, for example, those in need of food, shelter, clothing and more, even if we have the desire to do so.
Money being a major player in our lives also means we have to learn to play to its tunes at times. Money makes the world go round remember? The rich will tell you money isn’t really important but do not be deceived, money issues are real and it is known to be a major cause of divorce and anxiety in the world we live in today.
A survey carried out by ING International found that more than one in four households have no emergency savings pot.
About 27 percent of people in the UK were quoted as saying they have no savings they can quickly access if needed, excluding pensions and insurance policies.
A survey commissioned by GoCompare also found that nearly 60 percent of people have less than £1,000 of savings.
Majority of Britons consider £1,200 the right amount to keep in their bank account for unexpected expenses but still, it is surprising that a lot of people have far less than this amount in savings.
These statistics surprise me. Why? Because we live in the best of time in the history of mankind. The wealth available now is far more than any time in history. The number of overnight successes is also at an all-time high. Thanks to the role of technology, social media, and people’s general open-minded approach to new ideas.
It is then a concern to me that the abundance of money being made available to younger generations is being spent to fund expensive lifestyle instead of investing it to create wealth. It is, however, all good now as not much responsibility is attached to the teenage years and early adult years. But there is no denying that an investment made early stands a better chance of paying dividends quicker than that started later.
I am in my early 40s, I see a lot of people of my generation that do not have plans for retirement, and it is even worse in generations coming behind us. I like to think this is as a result of the example we are setting for them.
Remember I initially stated that money was designed to spend less and less time with you and your bank account? New smartphones, new smart TVs, expensive holidays, expensive luxury cars, designer clothes, and shoes, as well as parties, are some of the things people are spending money on. These people look rich when you see them but many are actually poor.
If they lose their job, a lot of this people do not have enough money to sustain for 3 months while still maintaining the same lifestyle they have now. It is sad really.
Do not get me wrong, I am not saying compromise on your quality of living. What I am saying is stop spending money on unnecessary things and delay gratification. Think about saving money now and build wealth for the future. Now is the best time to save not tomorrow.
I am not saying do not enjoy yourself. Enjoy yourself, live well but have a balance between enjoyment and saving for the future, compromise. Remember in your old age you will not have the strength to work, what you save and invest in as a seed will grow and you will profit from it later on.
Money is the major source of anxiety and the biggest source of stress for a lot of people. Money is crucial in our day to day activities yet a lot of people feel very uncomfortable when it comes to discussing the subject of money. A lot of people are worried about their personal finances but they are not interested in educating themselves about money.
If not for any other thing, the peace of mind that comes from being a saver and investor should make people embrace the habit of saving money. A research conducted by Lloyds shows that saving is good for mental health. Savers are likely to be happier than no-savers.
Embrace these 3 tips and you will be able to save more money.
- Savings Automation
A lot of people get cut up in over-analyzing how to save money. It is not rocket science, if you are struggling with saving money, try this. Calculate 10% of your income and set up a standing order of 10% of your income to go to a savings account. 10% is the minimum you should consider if you can afford an amount greater than 10% you should consider saving more than 10%.
For example, if you earn £2000 after tax, 10% of £2000 is £200. The good thing is you even stand to gain more by saving. If you learn about investing and start investing the money, compounding interest could transform the money to a large sum of money in the future.
This is related to the concept of paying yourself first which come from the book The Richest Man in Babylon. A lot of people do not pay themselves which is surprising. They are happy to pay everyone else but always forget to pay themselves.
This concept sounds so simple but only a few people do it.
See, you can start where you are, it doesn’t matter how old you are or how much you earn. If you are a young person that is just starting a career, you will benefit a lot from this and you will do yourself a huge favor if you can adopt this concept of paying yourself first and automating this process.
The interesting thing about this is that you can easily force yourself to believe that your income is £1800 instead of £2000. This is based on the example above. After you have been doing this for a while, you should automatically be having your budget on £1800 instead of £2000.
It is not complicated. From every 10 coins you earn, before you pay for the internet, mortgage/rent, food, clothes etc. pay yourself 1 coin first.
- Embrace Minimalism
Minimalism comes in various forms. Becoming a minimalist does not mean you give up your car, TV or house. Think about having fewer things. Embracing minimalist will help you to become more of a creator rather than a consumer.
We now live in a world that people live high consumption lifestyle and this lifestyle is digging a big hole in their finances.
A tablet is a bigger version of a mobile phone and unless it helps improve your productivity, it shouldn’t be needed. If you cannot afford a tablet why do you have to buy it on credit just because it is what is in vogue? Do you really need 40 pairs of shoes? A brand new car is nice but do you need a functional car that will take you from A to B or a new car you will need to buy on credit and will leave you playing catch-up in your finances?
Do not get me wrong on cars, if you can afford it why not. But I have seen a lot of people buy things they cannot afford to impress their family and circle of friends. It is a consumption age that we are now living in. The wealthy are acting poor and the poor are acting rich.
When you incorporate minimalism into your life you will be able to focus on necessary and important things rather than superfluous. Minimalism will help you to consume less and focus on creating things as well as impact your world for good.
I like the definition of minimalist on www.theminimalist.com. Minimalism is a tool to help get rid of life’s excess in favour of more important things in order to can find happiness, fulfilment, and freedom.
The minimalist approach will help you to have a different perspective on life and you will be able to separate need from want. When you are able to separate need from want then you will spend less and save more and this will help your happiness.
- Avoid Impulse Buy
We all have a lot of things inside our house or in the garage that we have never used since we bought them. These are things we bought without any plan in advance before we purchased them. This is what impulse buy is all about.
An impulse buy is buying based on your emotions and feelings without planning or thought of whether you actually have a need for that particular thing. Retailers are very good with the tactics that they deploy in the promotional messages which end up making us purchase what we do not have a need for.
The National Employment Savings Trust’s survey found that people in Britain spend more than £1 billion a year on impulse buys, with five percent of those admitting to spending on unnecessary purchases, wasting more than £500 in the process.
A lot of purchases big or small purchase like clothing, gadgets, home appliances could lead to financial difficulties and feeling of disappointment.
The general rule of thumb to tackle impulse buy is to give yourself a cooling off time. For big purchases usually, 30 days is a good time to have a think whether you really need that thing. During this period, you need to be real and ask yourself about what value will this appliance or gadget add to your life.
During the 30 days ask yourself, do I really need this gadget? Can I afford it? If I convert the cost of the gadget to time (hours), does it make sense for me to work for the number of hours just to buy this gadget?
Chances are you will realize that you don’t need the gadget or if you need it the price could have gone down and you will be buying it at a cheaper price.
When it comes to small purchases, give yourself 24 hours to think about it. After 24 hours you might have forgotten about it and this is a good indication that it is not as important as it seemed after all.
Another tip is to write down what you want to buy in the supermarket beforehand. And, you need to try as much as possible to stick to what you have written down.
When you embrace these three things you will be able to save more, build wealth and live in abundance.
The earlier you start investing part of your income the greater chance you have of building wealth. The simple fact is that we are creatures of habits and we are what we repeatedly do. Get into the habit of saving and investment as early as you can. The best time to start was yesterday and the second best time to start is now. Start now